CIMA CIMAPRO19-P01-1 Quiz 2 Topic 4 Questions 6-10

Question: 1

TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers' specific requirements. The standard cost per unit of its most popular cake is as follows:

q1_CIMAPRO19-P01-1

The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and $20 per kg respectively. TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no inventory during the period.

What was the material price planning variance for ingredient B?

AThe material price planning variance -- Ingredient B was $54 000 F

BThe material price planning variance -- Ingredient B was $64 000 F

CThe material price planning variance -- Ingredient B was $57 000 F

DThe material price planning variance -- Ingredient B was $59 000 F

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Question: 2

Explain why sensitivity analysis is useful when dealing with uncertainty in project

appraisal.

Select all the true statements.

ASensitivity analysis enables a company to determine the effect of changes to fixed costs on the planned outcome

BSensitivity analysis enables a company to determine the effect of changes to variables on the planned outcome

CIn project appraisal, an analysis can be made if all the key variables to ascertain by how much variable would need to change before the net present value (NPV) reaches zero i.e. the indifference point.

DIn project appraisal, in analysis can be made of all the key variables to ascertain by how much each variable would need to change before the net present value (NPV) reaches 100% i.e. the maximum point.

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Question: 3

TP makes wedding cakes that are sold to specialist retail outlets which decorate the cakes according to the customers' specific requirements. The standard cost per unit of its most popular cake is as follows:

q3_CIMAPRO19-P01-1

The general market prices at the time of purchase for Ingredient A and Ingredient B were $23 per kg and $20 per kg respectively. TP operates a JIT purchasing system for ingredients and a JIT production system; therefore, there was no inventory during the period.

What was the material price planning variance for ingredient B?

AThe material price planning variance -- Ingredient B was $54 000 F

BThe material price planning variance -- Ingredient B was $64 000 F

CThe material price planning variance -- Ingredient B was $57 000 F

DThe material price planning variance -- Ingredient B was $59 000 F

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Question: 4

The term 'budgetary slack' refers to the:

ALead time between the preparation of the functional budgets and the approval of the master budget by senior management

BDifference between the budgeted output and the actual output

CDifference between budgeted capacity utilization and full capacity

DIntentional over estimation of costs and/or under estimation of revenue in a budget

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Question: 5

A manager has not yet used all oh his budget. He is worried that his budget maybe reduced next year if he is not seen to have needed all the funds. He decides to spend the remaining 1,580 on another team building exercise as well as a catered lunch for his department.

This example falls under which behavioural aspect of budgetary control?

AIrrational spending

BMotivation

CBudget negotiation

DShort term focus

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CIMA CIMAPRO19-P01-1 Quiz:2 Topic:4 Questions:6-10